Are you installing 4.0 Update 1? To my knowledge, the previous release was not compatible with Windows 7.
Yes, it is 4.0u1.
This blog post and the attached screenshot suggests Windows might be blocking the install for security reasons: http://justin-bennett-msjc.blogspot.com/2009/11/vcenter-upgrade-25-upgrade-5-and.html
This thread suggests that a GPO could disable the ability to run MSI packages on the computer: http://communities.vmware.com/thread/140517
Hope it helps!